FERC Rules Against Idaho Utility: Upholds Wind Energy Power Purchase Agreement

In a move centered on Idaho but likely to have ramifications in other states, federal regulators ruled that Idaho Power has an obligation to buy wind-generated energy – even when electricity demand is low.

The utility was trying to use the Public Utilities Regulatory Policies Act (PURPA) to buy less wind energy from developers than its existing wind power purchase agreements (PPAs) require – arguing that PURPA allows it to get out of those agreements in off-peak periods, such as during the night or in the spring or fall.

Idaho Power argues that its curtailment request is covered and allowed under a PURPA regulation that states a utility, “will not be required to purchase electric energy or capacity during any period which, due to operational circumstances, purchases from qualifying facilities will result in costs greater than those which the utility would incur if it did not make such purchases, but instead generated an equivalent amount of energy itself.” 

But a group of wind farm developers, led by Idaho Wind Partners 1, points out the PURPA rule only covers operational emergencies, and that Idaho Power is trying to get around its negotiated PPAs to take advantage of historically low natural gas prices.

Rather than waiting for a state ruling on Idaho Power’s request – which is still pending – the group filed a petition in June with the Federal Energy Regulatory Commission (FERC) asking for its opinion on the matter – in order to erase any uncertainty around the purpose of the curtailment clause.

In its ruling issued in mid-September, FERC sides with the wind developers’ argument, sending a signal to the Idaho state commission that it would not agree with a decision finding in favor of the curtailment request.

"We find it appropriate at this juncture to address Idaho Wind’s petition. Leaving resolution of this issue until after the conclusion of the Idaho Commission proceeding would result in more uncertainty and, as Idaho Wind’s petition alleges, could lead to unnecessary and potentially significant financial consequences for Idaho Wind and similarly situated QFs," says FERC.

"We applaud FERC’s decision today, which upholds the sanctity of our qualified facility power purchase agreements with Idaho Power," says Steve Eisenberg, managing director of RP Wind ID LLC, the managing partner of Idaho Wind Partners 1, which has 11 subsidiary companies in Idaho. Each of those companies has a 20-year PPA with Idaho Power.

This isn’t likely to be the last we hear about this matter, since Idaho Power is examining the FERC order, but it sends a signal to other utilities and renewable energy developers that the cost implications of long-term PPAs should not be considered lightly. 

For the Idaho ruling:

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